Will Sturm, Ruger & Company have a good Q4?

Sturm, Ruger & Company (Public, NYSE:RGR), who primarily designs, manufactures and sells firearms to domestic consumers in the US, could be a prime target for your portfolio. The reason? Since the November elections, gun sales are up a massive 100-200%. Weapons dealers in much of the United States are reporting sharply higher sales since Barack Obama won the presidency a week ago.

Buyers and sellers say the surge is because of worries that Obama and a Democratic-controlled Congress will move to restrict firearm ownership, despite the insistence of campaign aides that the president-elect supports gun rights and considers the issue a low priority.

What it boils down to is gun owners are freaking out. And you, fellow Stockmasters, need to cash in on the panic.

"What people do is their own business, and if they decide to go out and buy guns they'll go out and buy guns, assuming that they are eligible to buy guns," John Podesta, the co-chairman of Obama's transition team, told reporters Sunday. "But I think that President-elect Obama has been clear in his campaign that what he wants to focus on is the economy, trying to get jobs growing again, dealing with the health care crisis, and dealing with our dependence on foreign oil."

Just take a look at this Google News Search:

http://news.google.com/news?hl=en&tab=wn&ned=us&q=gun+sales+up&ie=UTF-8&nolr=1&sa=N&start=10

This isn’t just Middle America here -- thousands of news sources are reporting all over the country that Gun Sales are spiking.

Ruger Shares have fallen from a high of $20 in 2007 down to $5.55 a share today. Another reason I like Ruger is their stock repurchase program. They recently repurchased 1.1 Million shares of its common stock, and still have $22 million in cash left over and no debt.

The downside of Ruger is that gun sales aren’t going to stay this high forever. The panic will subside at some point, and people will realize that the Obama administration isn’t going to ban sales of handguns. In spite of that, there is an opportunity to make money on Q4 earnings. As we get closer to the earnings report in Q1, shares should begin to rise in preperation. Whether or not shares stay high is questionable though, so this may be a quick in-and-out play.

RGR Chart: